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Uhm, Canadians still have the debt, it is just held publicly. This isn't pennies from heaven.
That is the point that Sags must obviously forget. There is a cost to this stuff. The money comes from someone. Either we confiscate it from someone else that we call rich and therefore must not deserve it, or, when that person fights back and figures out a way not to pay it, we print it up and effectively confiscate it from all Canadians in the form of inflation. One way or the other for everyone that receives a dollar someone probably pays a little more then that to provide it.
 

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All the money we are handing out now reduces our ability to fund future government spending, like hospitals, schools, health care, roads, transit, etc. You can only spend money once.
 

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Sags, despite all his time on this board, continues to prove he has no idea how money works, he’s like the homeless guy on the street, he gets money, spends it and demands more from those who have it in the name of fairness. He’s got no clue that government money is our money, or that you can’t spend your way out of debt. He sees every business owner as evil, despite creating the jobs and paying the profits into union pension funds. I wonder what he’d do if he successfully shut down all these evil companies and could no longer collect his pension because no one was making any money to put into his pension. He’d probably demand we tax the rich for him.
 

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Interesting that Canadians net worth, investments, and savings rates went up by more than the government spent on COVID.

The government will have to hold the debt, but it looks like the effects of the spending was a very positive impact.

Direct deposits into Canadians’ bank accounts increased in the last three months by almost $94 billion. Billion. With a b. The most ever. Household net worth in the midst of the worst downturn since the 1930s was up by 5%. The value of investments increased by over $300 billion. Residential real estate was pushed higher $78 billion in just 90 days. Yikes.

There’s more. The ratio of debt payments to income dropped by the largest amount on record, partly because of all those mortgage deferrals. Debt as a percentage of income plunged from over 175% to 158% – the biggest quarterly plop ever.


 

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Government spending = increased GDP, savings and investments making it easier to structure and repay the debt from increased government revenues.

The government refinanced all the debt for a longer period at lower interest and the debt servicing costs are lower now than before the COVID spending.

Governments hold more of their own debt today. The BOC made significant purchases of assets during the pandemic.

Some of you are too immersed into ancient Milton Friedman economics, which were a disaster back in the 1970s and would be today.

Do some research on Modern Monetary Theory. That is where the world is today........partly along the shift to MMT.
 

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"He’s got no clue that government money is our money"

You are right about that. I don't agree with your theory that it is "your money".

Money was created by governments as a standard medium to pay taxes. That is why you have to pay US taxes in US dollars.

The government controls the creation of money and the government distributes it to the people as a medium of exchange for goods and services.

You get to hang onto it until the government takes it back.
 

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I think one thing being overlooked is that our (Canadian) investment values, both stocks and bonds, have largely been boosted by the stimulus actions in the USA. The Canadian bond market moves with about 90% correlation to the US bond market. The two are closely coupled, and the US basically drives our bond market.

So when the Federal Reserve manipulated the bond market, Canadian investors benefited. And when the Federal Reserve pumped however many trillion $ into financial markets (I've lost count now honestly) to move markets higher, Canadian & global investors also saw gains.

To some extent, the USA is stimulating the whole world. Our Canadian investment and pension balances, even the CPP fund, have all benefited from American stimulus. That could partially explain why it looks like we've gotten a larger benefit than Cdn government spending. It's because the US is paying the bills and consequences.
 

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What do you think would happen if the government didn't pay the CERB or CEWB ?
Millions of people and businesses would default. The loans on bank balance sheets would implode (very high loan losses). Then, the banking system would implode, bank equities would be wiped out, bail-ins would start. Ultimately banks would be nationalized and Canada would have a 5-10 year depression.

The people around here complaining about the handouts had better think more carefully about what happens when millions of people suddenly default.

There is no choice but to make these payments. Or, if you really want to lobby for the subsidies to stop, then you'd better get out of bank equities and make sure you don't have any uninsured deposits.
 

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The government controls the creation of money and the government distributes it to the people as a medium of exchange for goods and services.

You get to hang onto it until the government takes it back.
But Sags, that is exactly what we are all trying to prevent, this taking it all back to pay for a bunch of programs that allow people to sit around and do absolutely nothing.
 

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The government controls the creation of money and the government distributes it to the people as a medium of exchange for goods and services.

You get to hang onto it until the government takes it back.
The government can print money but it can't create money or wealth. Individuals and corporations create the wealth and then the government takes it and then redistributes it.

You seem to think that the money belongs to the government instead of the people.
 

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Millions of people and businesses would default. The loans on bank balance sheets would implode (very high loan losses). Then, the banking system would implode, bank equities would be wiped out, bail-ins would start. Ultimately banks would be nationalized and Canada would have a 5-10 year depression.

The people around here complaining about the handouts had better think more carefully about what happens when millions of people suddenly default.

There is no choice but to make these payments. Or, if you really want to lobby for the subsidies to stop, then you'd better get out of bank equities and make sure you don't have any uninsured deposits.
We could have provided equivalent liquidity by giving the CERB in the form of zero interest loans that wouldn't have needed to be repaid for several years (and potentially forgiveable). Now, all the fiscal firepower has been blown and can't be used for more targeted interventions. What would the benefit have been if, say, we put $400 billion into infrastructure?
 

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The government can print money but it can't create money or wealth. Individuals and corporations create the wealth and then the government takes it and then redistributes it.

You seem to think that the money belongs to the government instead of the people.
Government can create wealth by providing public goods. Building infrastructure often creates a lot more wealth (increase in property values) than it cost to create that infrastructure. The 407 highway cost $1.5B to build. The province sold it for $3.1B and it is now worth $30B. Pretty good investment. Doesn't count any of the knock-on benefit of increasing property values along the corridor, which is probably in the 9 figure range.
 

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The Liberal convention made a Guaranteed Basic Income the top priority for the government.

It is apparent they are not interested in a UBI, but a restructuring of the social benefits that currently exist.

A GBI could streamline administration and reduce costs, eliminate arbitrary rules that are disincentives to education or work, and provide a minimum income.

Funding is likely to be part of a reduction of Provincial transfers as the Federal government assumes some of those costs from the Provinces.

I suspect we will be hearing more about a GBI.......than a UBI in the future, and it will likely be part of a post pandemic election platform.

 

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A GBI could streamline administration and reduce costs, eliminate arbitrary rules that are disincentives to education or work,.........
It's funny how things never work out that way though.

The Marxist mantra only looks good on paper. In reality, it has failed over and over and over.........

ltr
 

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We could have provided equivalent liquidity by giving the CERB in the form of zero interest loans that wouldn't have needed to be repaid for several years (and potentially forgiveable). Now, all the fiscal firepower has been blown and can't be used for more targeted interventions. What would the benefit have been if, say, we put $400 billion into infrastructure?
That's an interesting idea, the loan direction. However this would be far more complex on the administration side and let's remember, they had to pump out stimulus very fast -- and they DID. The program got rolled out and cash delivered incredibly fast.

You can't do the same with a loan system.
 

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It's funny how things never work out that way though.

The Marxist mantra only looks good on paper. In reality, it has failed over and over and over.........

ltr
And yet......our social programs have evolved through many literations over time and still no fall into chaos.

You do know for example, that OAS began as a small benefit for retirees funded by a special tax levy ?
 

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That's an interesting idea, the loan direction. However this would be far more complex on the administration side and let's remember, they had to pump out stimulus very fast -- and they DID. The program got rolled out and cash delivered incredibly fast.

You can't do the same with a loan system.
I disagree. They could just tell everyone that it was a loan, and worked out the administration later. Every recipient has a SIN. As it stands, it will effectively be a loan for many people who will later be deemed to have been ineligible. They will have to repay the benefits.

It could have been as simple as a negative tax credit, to be repaid as a tax surcharge of later income, starting in a couple years. Pay an extra 10% marginal tax on income over a certain amount until the loan is repaid.

The main downside is that people may not have been as persuaded to comply with lockdown due to wealth impact (vs lack of liquidity) of not working.
 

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I disagree. They could just tell everyone that it was a loan, and worked out the administration later. Every recipient has a SIN. As it stands, it will effectively be a loan for many people who will later be deemed to have been ineligible. They will have to repay the benefits.
Maybe that could have been a good way to go but I'm still not convinced, because the people who really need CERB are the ones who are not going to be able to repay loans.

Many of us writing here are reasonably well off. Personally I only saw a small reduction in my income... I've been very lucky. There are many people who are absolutely screwed in the current situation. They were living paycheque to paycheque, working in the service industry. Or people working in travel, leisure, airports & airlines.

This is an extremely bad situation for many people. They truly are going to need large cash handouts NOW otherwise they are going to default on everything, get evicted, end up on welfare, on the street, and at food banks. They are already at the food banks.

Those people hit very hard can't repay loans. They will be lucky if they don't declare bankruptcy through this whole thing. I don't like the idea of giving loans to people who had job losses in the COVID situation.
 

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The CERB is taxable income, so anyone earning more than their personal exemptions will pay tax on the amount they received.

The government could have said it was a loan, but how would Canadians have reacted to that ? I think they would have said the government was being nasty.
And now look at the socialist abomination it has grown into. A couple can receive OAS up to an income of $155K. Socialism gone crazy.

ltr
I like your thinking PG.

Lower the OAS clawback level to fund the GBI. Keep those good ideas coming !
 
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